Shaw’s, Star Market chains could be sold soon

After changing hands twice within the past decade, the Shaw’s and Star Market stores could end up on the market again.

Jon Chesto

After changing hands twice within the past decade, the Shaw’s and Star Market stores could end up on the market again.

Supervalu Inc., the stores’ current owner, unveiled plans to explore strategic initiatives with the help of financial advisors Goldman Sachs and Greenhill & Co. Supervalu CEO Craig Herkert told Supervalu employees in a memo that the review will weigh a possible sale “or other disposition” of the entire company, or just parts of it.

“I don’t think, a year from now, we’re going to see Supervalu as it is today,” said Mike Berger, senior editor at the Duxbury-based Griffin Report of Food Marketing.

The news accompanied another disappointing quarterly report from Supervalu. The Eden Prairie, Minn.-based company, while still profitable, fell short of Wall Street’s expectations. Supervalu reported sales on Wednesday of $10.6 billion for the quarter that ended June 16, down 5 percent from $11.1 billion a year ago. Net income plunged to $41 million from $74 million, and the company suspended its quarterly dividend.

Supervalu is trying to respond to investors’ demands, in part by implementing $250 million in expense cuts over the next two years. The company has also embarked on a wide-ranging price reduction strategy that will be rolled out in all of its supermarket chains by early 2014.

Berger said the problems faced by Supervalu in New England reflect the intense competition that the company is seeing across the country.

In particular, Berger said, Shaw’s has struggled in the face of Tewksbury-based Market Basket’s recent expansion, with that chain’s reputation for low prices. The arrival of Wegmans in Massachusetts, Berger said, also poses a major threat. Berger said he would not be surprised to see fewer Shaw’s stores a year from now.

Shaw’s has been the No. 2 grocer in New England behind Stop & Shop, based on the number of stores. But Shaw’s lost some ground when Supervalu closed or sold its Shaw’s stores in Connecticut about two years ago.

The company operates 169 Shaw’s and Star Market locations today. The Shaw’s group, which employs more than 20,000 people, is run out of a corporate office in West Bridgewater.

There were nearly 200 Shaw’s and Star Market stores when Supervalu acquired them in mid-2006 through its purchase of most of the supermarkets owned by Albertsons. Other chains that Supervalu acquired at the time included Acme Markets and Jewel-Osco. Albertsons had owned the Shaw’s group since 2004, when it bought the stores from British retailer J Sainsbury.